Thursday, 28 January 2016

Can Some Socialism Be a Good Thing?

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In September 1848, during the founding of the Second Republic in France, French legislators were discussing ways to alleviate the problem of French unemployment. The French economy was in a perilous state following the turmoil of the February revolution that had overthrown the French monarchy and left the society and economy in turmoil. Many French legislators favored “make-work” projects, whereby the new government could allegedly wipe out unemployment and give the economy a boost by putting unemployed Frenchmen to work on grandiose public-works projects.

Such political artifices have become routine in our day, as the Obama administration demonstrated, in the wake of the Great Recession, by spending huge sums of money on public works to provide jobs that would allegedly give our shattered economy a boost. But what is today widely regarded as standard public policy — use of public funds and resources in an effort to create jobs and redirect market energies — was in the mid-19th century very radical stuff. During the September debate in Paris, one famous legislator, Alexis de Tocqueville, dared to call such measures what they really were: socialism.

Tocqueville, like his contemporary (and fellow French legislator) Frédéric Bastiat, was a staunch opponent of the subversive dogma of socialism, which only recently had begun taking root in Europe, and had been the inspiration for the wave of revolutions that had swept the continent earlier in the year. As Tocqueville cautioned his fellow legislators:

Gentlemen, sooner or later, the question of socialism, which everyone seems to fear and which no one, up to now, has dared treat of, must be brought into the open, and this Assembly must decide it.... I confess that it is principally because of this that I mount the podium today, that the question of socialism might finally be settled. I must know, the National Assembly must know, all of France must know — is the February Revolution a socialist revolution, or is it not?

It is not my intention to examine here the different systems which can all be categorized as socialist. I want only to uncover those characteristics which are common to all of them and to see if the February Revolution can be said to have exhibited those traits.

Now the first characteristic of all socialist ideologies is, I believe, an incessant, vigorous, and extreme appeal to the material passions of man.

Thus, some have said … that “man must be paid, not according to his merit, but according to his need”; while … they have told us here that the object of the February Revolution, of socialism, is to procure unlimited wealth for all.

A second trait, always present, is an attack, either direct or indirect, on the principle of private property. From the first socialist who said, fifty years ago, that “property is the origin of all the ills of the world,” to the socialist who spoke from this podium and … exclaimed that “property is theft,” all socialists … attack, either in a direct or indirect manner, private property.... All socialists, by more or less roundabout means, if they do not destroy the principle upon which it is based, transform it, diminish it, obstruct it, limit it, and mold it into something completely foreign to what we know and have been familiar with since the beginning of time as private property.

Now a third and final trait, one which, in my eyes, best describes socialists of all schools and shades, is a profound opposition to personal liberty and scorn for individual reason, a complete contempt for the individual. They unceasingly attempt to mutilate, to curtail, to obstruct personal freedom in any and all ways. They hold that the State must not only act as the director of society, but must further be the master of each man, and not only master, but keeper and trainer. For fear of allowing him to err, the state must place itself forever by his side, above him, around him, better to guide him, maintain him, in a word, to confine him. They call, in fact, for the forfeiture, to a greater or lesser degree, of human liberty, to the point where, were I to attempt to sum up what socialism is, I would say that it was simply a new system of serfdom.

… Everywhere you … find [these characteristics], you will be sure to find socialism, and wherever socialism is, these characteristics are met.

Tocqueville, famous for his travels in America and his trenchant and approving analysis of American government and society, was a well-respected political philosopher on both sides of the Atlantic. His definition of socialism, given when it was in its infancy, is as accurate today as it was in 1848, with the hindsight of more than 150 years of historical experimentation with various strains of socialism. Then as now, socialism may be correctly defined as any political and economic system that involves 1) a strong emphasis on the material and materialistic (as opposed to spiritual or religious) aspects of human nature, 2) dogmatic attacks on private property, and 3) a contempt for personal liberty, individuality, and reason.

Tocqueville regarded socialism as merely a modern version of feudal serfdom, dressed in beguiling new rhetoric. But in the years since the spectacular failure of the communist societies of the former Warsaw Pact, the collapse of the Soviet empire, and the softening of Marxist dogma from China to Africa, the defenders of socialism have hit upon a new tactic: communism bad, democratic socialism good. Presidential candidate Bernie Sanders, a self-professed “democratic socialist,” has popularized this notion in the current presidential campaign.

According to socialist lore, “moderate” democratic socialism has proven to be an enlightened tool allowing the creative use of state power to guide societal and economic development toward more enlightened ends than would be possible with unalloyed laissez-faire economics and “extremist” devotion to individual liberty. Most of the nations of Western Europe, as well as Canada, Australia, and other developed countries (including the United States) have used democratic socialist policies to great advantage, goes the refrain; nowhere has it led to concentration camps, societal collapse, oppression, or economic decline — contrary to the alarmist claims of those who paint all socialism with the same brush. But such claims ignore critical factors that obscure the true nature of socialism — no matter how it is dressed up — as Tocqueville defined it.

First of all, Tocqueville’s three cardinal characteristics of socialism are as recognizable in the policies of modern “democratic socialism” as they are in communism, Maoism, and more virulent, overtly despotic forms of socialism, differing only in degree. As even most defenders of democratic socialism freely profess, the good of the collective supposedly trumps individual liberty. Private property (and the economic system that grows out of it, free-market capitalism) is routinely invoked as a consequence of man’s evil, selfish tendencies. While democratic socialist governments do not go so far as to abolish private property entirely, as has been tried by many communist regimes, they routinely confiscate private property in the name of the public good (such as the formation of a new park or wildlife refuge) and dilute the right to the purchase, sale, and use of private property to such a degree as to make the term nearly meaningless.

As to the emphasis on material interests and passions remarked by Tocqueville, socialism in nearly all its strains is notoriously anti-religion (especially Christianity), and in its guise of “cultural Marxism” (originally inspired by the “Frankfurt school” of philosophers such as Herbert Marcuse and Erich Fromm, who gave rise to the postwar “New Left” with its fascination with cultural subversion) can be counted upon to attack, disparage, and otherwise undermine every aspect of traditional Christian morality and belief.

There can be no question that modern democratic socialism, including the radical social agenda of the New Left, has radically transformed Western society from an essentially Christian culture to a radically secular, predominantly anti-Christian one. In its war on religion and morality, democratic socialism has arguably been more successful than many communist governments. No Marxist, Leninist, or Maoist government ever broke down the family to the point where so-called same-sex marriages and adoptions became broadly acceptable. No communist state ever produced atheist apologists as eloquent or influential as the likes of Richard Dawkins or Christopher Hitchens.

But the question lingers: Surely democratic socialism cannot be compared with the horrors of Pol Pot’s Cambodia, Mao’s China, Stalin’s Soviet Union, and so forth. Regardless of one’s misgivings about socialism’s subversive moral agenda, do not the shining examples of robust Western economic and technological progress serve as evidence that socialism can be judiciously applied for the greater good, with unambiguously progressive outcomes?

The problem with the “good socialism” arguments is that all the examples usually given are countries that were already prosperous when socialism was implemented; ignored are innumerable examples of countries that started out poor, and implemented democratic socialism (instead of hard-core Marxism) to their detriment. Also ignored are instances of countries that have self-inflicted heavy doses of democratic socialism for very long time intervals — the “pioneers” of democratic socialism, as it were. Finally, considerations of relative wealth are generally ignored; that is, given that modern technology, medicine, and capital accumulation has tended to enrich all nations in varying degrees, even the poorest, most backward nations enjoy standards of living higher than former generations. So how do more-socialist countries tend to progress relative to less-socialist ones? We will consider examples of all three cases to get a clearer picture of the fruits of democratic socialism.

The United Kingdom

At the beginning of the 20th century, the United Kingdom was the most powerful nation on Earth. Not only did the sun never set on the British Empire, the United Kingdom had the world’s largest economy and highest standard of living. From the vantage point of any rational observer in the Edwardian Age, the U.K. was the world’s indispensable nation and would remain at the pinnacle of power and prosperity for generations to come.

But in the midst of the prosperity and optimism of the prewar years, a new political movement was invading the British body politic. So-called “Fabian socialism,” or socialist incrementalism, had been devised by British intellectuals in the late 19th century. In 1900, the Fabians founded the Labour Party as a political vehicle to advance their goals. So quickly did the Labour Party grow in influence that the U.K.’s other leftist party, the Liberal Party, felt compelled to adopt portions of the Labour (and socialist) program following the elections of 1906. The most significant of these was undoubtedly one of the world’s first instances of government-mandated healthcare, enacted in 1911 with the National Insurance Act, which guaranteed free medical treatment and 26 weeks’ worth of sick pay.

Following World War I, the advance of socialism in the U.K. continued, with the Labour Party winning its first election in 1924. The U.K.’s first Labour government was led by Prime Minister Ramsey MacDonald, who openly worked to advance the socialist program (and frequently said so, like Bernie Sanders). From then until the end of World War II, the Labour Party tried to advance its socialist agenda in the face of fierce Conservative opposition.

Once World War II was ended, however, the seeds of socialism, diligently nurtured by the Fabians and the Labour Party for more than four decades, finally germinated with a vengeance. In 1945, the Labour Party triumphed in its biggest electoral win yet, winning an outright majority in Parliament and appointing Clement Attlee as a prime minister with a mandate.

Attlee and his Labour allies lost no time in transforming Britain into a truly socialist country. They nationalized many critical industries (such as coal), hiked taxes massively, and set up a cradle-to-grave welfare state with full-fledged socialized medicine, social security, and generous pensions.

The results were not surprising. After a couple of years of economic growth, propelled no doubt by postwar optimism and an influx of American financial aid, the British economy tanked at the end of the decade. The British electorate, disillusioned with socialism’s unfulfilled gaudy promises, voted the Conservatives back in in 1951, and the economy took off. While British Tories (like their American GOP counterparts) had by now accepted parts of the socialist program, they still managed to cut taxes and to reduce the size and cost of government enough to usher in a period of strong economic growth that lasted through the 1960s.

In 1964, however, the Labour Party, led by Harold Wilson, was voted into power again, where it remained for the next six years, enthusiastically building on the socialism of the Attlee government. Abortion and homosexuality were legalized (in a nod to the social and moral agenda of the New Left).

The 1970s, a period of global malaise, was as unkind to the U.K. as it was to the rest of the Western world. The 1980s saw a revival of British fortunes under the leadership of Margaret Thatcher, the last British leader to date to directly challenge socialism. Since then, the fortunes of socialism in Britain have largely followed the ups and downs of the Labour Party.

What is the result of decades of socialist policies in the U.K? Since its inception, socialism has competed with Britain’s centuries-old tradition of relatively limited government and laissez-faire economics, and the struggle has been an uneven one. Today Britain — like many other Western countries — is a hybrid of socialism and capitalism, a circumstance touted as ideal by democratic socialists and their ilk. However, it is unlikely to prove a stable system for much longer, given the immense burden of public debt that socialism inevitably incurs.

More to the point, the progress of the U.K. relative to the rest of the world reveals some hard truths about the consequences of even “a little” socialism. On the eve of the First World War, Britain was unquestionably the wealthiest country on Earth; it was also the most technologically advanced and had the highest overall standard of living. Contrary to what is popularly believed, this prosperity was not due, in the main, to her vast imperial holdings. Maintaining the globe-engirdling British Empire generally cost more than it brought in. After all, the British needed to build and maintain a huge state-of-the-art navy to police the world and support tens of thousands of occupying troops and government administrators in its far-flung dominions, from Newfoundland to the Indian Raj to East Africa to Southeast Asia. It fought many costly wars — in Afghanistan, in India, and in North America, for example — to defend its empire.

Most vast empires assembled in haste tend to collapse just as quickly, precisely because of the cost involved in keeping them. But the comparatively tiny nation of the U.K. somehow generated enough revenue to maintain the empire for generations, and improve its domestic economy into the bargain. The reason for this was Britain’s embrace, during the 19th century, of many of the principles of laissez-faire economics. Spurred on by the economic ideas of Smith, Say, Ricardo, and many other early economists more or less in favor of capitalism, Britain opened its doors to international trade and aggressively reformed property laws to make land ownership “in fee simple” (the common-law equivalent to true private land ownership) accessible to all Britons and free from feudal constraints. The 19th century was a repudiation of the earlier mercantilist system, and led to an economic miracle in Britain. Upon such a vast repository of wealth, the socialists were able to enact ambitious rob-Peter-to-pay-Paul collectivist schemes that lesser economies could not possibly have indulged.

Still, socialism in the U.K. has taken a steady toll. From being the world’s top economy, Britain is now down to fifth or sixth. More tellingly, the standard of living for individual Britons, once the envy of the rest of the world, has not kept up with many other countries. According to the metric of the Human Development Index, the U.K. now ranks 14th in the world, right after Sweden. In terms of GDP per capita, perhaps the most accurate measure of household wealth, the U.K. ranks 30th (according to the CIA’s reckoning), right behind #29 Japan, and far behind the likes of Qatar (#1), Singapore (#4), Brunei (#6), the United Arab Emirates (#9), and Switzerland (#10). In fact, five other non-Western countries (besides Japan and the UAE) also outperform the U.K. The fact that the likes of Oman and Taiwan are now wealthier per capita than Britain speaks volumes about the damage done by decades of socialism.

In non-economic terms too, socialism has taken its toll. The British population has been almost completely disarmed by aggressive gun confiscation, and the government has now turned its attention on knives. Hunting, once a national British pastime, is mostly illegal. Britain is known for its Orwellian penchant for surveillance, with cameras watching nearly every street corner in every city. Taxes are sky high. And the ratio of U.K. government debt to GDP is about 90 percent, one of the highest in the world.

The chief reason that the decline of the U.K. under democratic socialism has not been far more severe is the resilience of enlightened British laws and traditions that antedate socialism by centuries. But the cost of socialism, in cultural, moral, and political terms as well as economic, has been severe nonetheless, and will eventually lead to the overthrow of even the most enduring British institutions from her more enlightened past, unless socialism is rejected.

Because of her history and enormous reservoirs of wealth and tradition, the case of democratic socialism in the U.K. is an exceptional one.

Argentina

A more instructive example is the case of Argentina, whose experimentation in socialism closely paralleled that of the U.K., but with far more damaging consequences. Like the U.K., Argentina possessed one of the world’s strongest economies in the years leading up to World War I (the 10th largest economy in 1913). Unlike the U.K., however, this economic strength was due more to accidents of geography than to enlightened public policy. Argentina is blessed with a vast and fertile agricultural belt, as well as abundant mineral resources. By the beginning of the 20th century, money was flowing into the republic on the River Plate, thanks to exports of beef, wheat, and wool. Her public debts were low, and her gold and silver reserves among the world’s largest. Like the United States, Argentina weathered several sharp recessions in the late 19th and early 20th centuries, and emerged largely unscathed. Spared the ravages of two world wars, Argentina continued to prosper relative to most of the rest of the then-developed world; even the Great Depression took a comparatively minor toll.

Argentina’s Achilles’ Heel has ever been political instability. Prone, like most of the rest of Latin America, to military coups, Argentina never developed the enduring enlightened legal traditions of the British or the Americans, and was far more vulnerable to radical socialist reforms.

Argentina’s turning point came at the same time as Britain’s. In 1946, while Clement Attlee was beginning his postwar socialist transformation of the U.K., a brash young politico named Juan Perón was swept to power in Buenos Aires after electoral promises of land reform, social security, higher worker wages, and other elements of the socialist program.

Perón encountered little legal or institutional resistance to his socialist reforms, which he enacted with a vengeance. Perón instituted a regime of wage and price controls (including such abuses as a 1947 law dictating restaurant prices and menus), clamped down on international trade, seized private property for the government, spent lavishly on infrastructure projects, built up labor unions — and paid for all of it by printing money. For a few years, Argentina was able to use wartime reserves to help pay for Peronist extravagance, but by the 1950s the bill had begun to come due, in the form of economic stagnation. Undeterred, Perón rolled out two Five Year Plans, the gist of which was to favor agriculture over industry.

Wearied by the blizzard of new socialist controls, Argentines applauded Perón’s ouster in 1955 by yet another military coup. But the damage was done. Having had a taste of socialism and welfarism, Argentines were reluctant to let it go. During the 1950s and ’60s, what was generally a period of strong economic growth elsewhere in the developed world brought mostly economic decline for Argentina. Despite her enviable natural abundance, her economy continued to decline and massive public debt, coupled with soaring inflation, became permanent fixtures on the Argentine economic landscape. Chronic political instability continued as a succession of Argentine governments continued to try to make Peronist socialism work, but without success.

It was Argentina’s unending malaise that led to a communist uprising in the 1970s, which was suppressed by yet another military coup. Argentina’s military junta, in turn, fell from power after its disastrous loss to Britain in the 1982 Falklands War, setting off one of the worst episodes of hyperinflation in world history.

By the end of the 20th century, a prostrate Argentina was no longer able to service her gargantuan public debt, and defaulted on her obligations to foreign lenders at the end of 2001. This, the largest public default in history, ushered in a devastating depression and an unprecedented wave of crime and civil unrest that lasted for several agonizing years.

Yet when the worst was over, Argentines, unchastened by 60 years of failed socialist experimentation, elected leftist Nestor Kirchner, who immediately began implementing tried-and-failed socialist nostrums such as price controls and the nationalization of private assets. By restructuring Argentina’s public debt and paying off some of it, Kirchner was able to postpone the evil day. But his policies, and those of his wife and presidential successor Cristina Fernández, continued the Peronist and socialist legacy, leading to a return to economic malaise and a second Argentine default in 2014.

President Fernández blamed all of Argentina’s ills on wicked capitalists, as socialists are wont to do, but the historical record in Argentina is devastating to the case for democratic socialism. Argentina is an excellent cautionary tale of what even “a little” socialism can accomplish when it is allowed to operate unopposed. Socialism Argentine-style did not bring about the gulags and extreme despotism and impoverishment of true communism, but it led to civil war, military dictatorship (complete with tens of thousands of “disappeared” citizens), and economic devastation. It has created a culture of entitlement second to none (a former classmate of mine in Argentina, now living in Spain, recently told me that most of our Argentine high-school classmates from the late 1970s took government jobs and are now — in their early 50s — retired and pensioned). From once having the world’s 10th largest economy, Argentina now weighs in at about number 24, right behind Poland. But in terms of GDP per capita, the former jewel of South America has fallen to an abysmal number 54, just ahead of West African nation Gabon, and behind the likes of Kazakhstan, the Seychelles, and Equatorial Guinea.

Sri Lanka

If democratic socialism can inflict such havoc on a developed country, it is far more deleterious to countries without vast reserves of wealth to draw down. In 1948, on the eve of independence from Britain, Ceylon was poised to become an Asian success story. Blessed with abundant rainfall and fertile soil, the West Virginia-sized tropical island nation off India’s southeast coast was a world away from the teeming, intractable poverty and ethnic strife of the South Asian mainland. Ceylon’s two major ethnic groups, the Hindu Tamils and Sinhalese Buddhists, largely coexisted in a peaceful, orderly social arrangement that predated the arrival of European colonial powers. In addition, the British had introduced many important cash crops, such as pineapples and especially tea, to Ceylon. The island also was (and remains) one of the world’s top producers of gems, especially rubies and sapphires. And her lush tropical forests were full of valuable wood. Add to this hundreds of miles of pristine beaches and fisheries second to none, and Ceylon (now called Sri Lanka) had every appearance of an Asian power on the rise.

But it never happened. Instead of following East Asia’s “dragons” (Singapore, Taiwan, Hong Kong, and South Korea) into modernization and prosperity, Sri Lanka, until recently, followed an entirely different path. Ethnic strife between Sinhalese and Tamils was partly to blame — but so was Sri Lanka’s budding love affair with socialism (no doubt encouraged by the example of her giant neighbor to the north, India). In the early 1970s, Sri Lanka officially adopted socialism, becoming the Democratic Socialist Republic of Sri Lanka, and her downward spiral began in earnest. In the ensuing years, Sri Lanka instituted most of the socialist program — wage and price controls, restraints on trade, government-subsidized healthcare, pensions, and the like — without having the accumulated wealth to pay for it. In addition, Sri Lanka fought two civil wars, one of which pitted Sinhalese Marxists against more moderate socialists. Sri Lanka’s conservative Buddhist majority culture made such socialist measures as restrictions on trade (to keep out “impure” foreign influences) and limits on industrialization (to preserve traditional Buddhist society) an easy sell.

But whereas the capitalist nations of East Asia now vie with the West for economic clout, Sri Lanka has only recently begun to modernize and to liberalize her economy. These days, the Colombo skyline is a thicket of new skyscrapers, and several modern highways now facilitate the movement of goods and services. But much of Sri Lanka’s regime of price and wage controls, along with the rest of the socialist program, persists, and Sri Lanka’s GDP per capita is 104th in the world.

The Most “Successful” Experiments

Much the same could be said of many other “Third World” countries, from South Asia to Africa to Latin America, which adopted democratic socialism and saw any promise of economic growth quashed. From the “banana republics” of Central America to the great socialist experiments in Tanzania and India, socialism, more than any other factor, has helped to prevent “the global South” from fulfilling its potential.

But what of countries such as Sweden and Denmark, avowedly socialist countries that routinely appear atop the lists for quality of life, national happiness, and the like? In the first place, such countries — unlike most of the rest of the world, including melting pots such as Argentina (and the United States) and multi-ethnic states such as the U.K. and Sri Lanka — are small and remarkably homogeneous (even tiny Sri Lanka has a population more than twice that of Sweden and nearly four times that of Denmark). Moreover, Denmark and Sweden are among the highest-taxed nations on Earth. Denmark has the world’s highest rates of taxation; in the middle of the last decade, it stood at around 50 percent of the GDP, and by 2013, that figure had declined very slightly, to 47 percent — but high income earners can still pay up to nearly 60 percent of their earnings in taxes. Denmark has very high national and municipal income taxes, as well as a steep value-added tax, property taxes, and even a “church tax” for members of the Danish National Church, the established church of Denmark. Sweden has the second-highest rate of taxation in the world, at around 44 percent of the GDP. At one point in her modern history, the top income tax rate in Sweden was near 100 percent, prompting the rise of an anti-tax movement in the 1970s involving such prominent Swedes as internationally famous children’s author Astrid Lindgren, a movement that led to the temporary ouster of Sweden’s Social Democrats.

Not surprisingly, both Denmark and Sweden have enormous public (non-productive) sectors; in Denmark, just under 40 percent of all full-time employment is in the public sector, paid for by Danish taxpayers.

Many civil liberties are greatly restricted in both countries in comparison with the United States (censorship, for example, is routine). Recent historical factors have also favored both countries. Both Sweden and Denmark were neutral in World War I, with the result that Sweden became very wealthy from wartime exports. Both countries were also spared the ravages of World War II, although the Nazis did occupy Denmark without firing a shot. Such factors as these, in combination with the strong work ethic, emphasis on thrift, and extreme desire for order above all else that characterize Scandinavian culture have allowed both countries to indulge massive amounts of socialism, paying for it in the coin of more than half the national income. But claiming, as the likes of Bernie Sanders are wont to do, that socialist central planning that appears to work (and not especially well) in tiny, relatively homogeneous societies such as Sweden and Denmark could be successful in a country as large and diverse as the United States — not to mention one for which individual freedom is a paramount value — is comparing apples to oranges. Socialism on the scale practiced in Scandinavia would not only be impracticable here, it flies in the face of every American instinct favoring individual liberty.

The record of democratic socialism is not encouraging. In countries with little wealth, such as Sri Lanka, it prolongs and exacerbates poverty and political instability. In countries with wealth but weak legal institutions, such as Argentina, it destroys wealth and society alike, and leads to authoritarianism if not outright despotism. Only in countries with strong legal and social institutions to resist its blandishments — such as the U.K. and United States — and in very small, highly uniform societies, such as Sweden, is the damage inflicted by socialism comparatively limited.

Even so, the record of the most “successful” experiments in democratic socialism cannot compare with the record of limited government and laissez-faire economics. For it is they, and not socialism, that are responsible for the brilliant ascent of Western civilization — especially in the United States — and it is they that continue, despite every effort of socialists and leftists of every stripe to squelch them, to be the chief wellsprings of human progress.

 

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